Transcript: Nightly Business Report – January 16, 2017

NBR-ThumANNOUNCER: This is NIGHTLY BUSINESS REPORT with Tyler Mathisen and Sue
Herera.

TYLER MATHISEN, NIGHTLY BUSINESS REPORT ANCHOR: Good evening, everyone,
and welcome to this special edition of NIGHTLY BUSINESS REPORT. I`m Tyler Mathisen.

SUE HERERA, NIGHTLY BUSINESS REPORT ANCHOR: And I`m Sue Herera.

And tonight, we are going to take a close look at jobs in America. It is
been the focus of President Obama since he took office eight years ago.
It`s been the target of President-elect Trump as he prepares to enter the
White House. It is something that Main Street wants more of that Wall
Street obsesses over and that the Federal Reserve bases their policy
decisions on. And as we all know in this past election, the uneven nature
of the labor market recovery was a top issue for voters.

MATHISEN: Well, if you look at the numbers, the labor market today appears
solid. More than 11 million jobs have been created over the past eight
years. The most recent employment reports show that at the end of 2016 the
unemployment rate was 4.7 percent. That was the lowest level to end the
year in a decade and less than half of the roughly 10 percent peak in 2009.

Wages rose at their fastest clip since the Great Recession last year,
something American workers have been waiting a long time for. December
2016 almost marked the 75th straight month of job creation, the longest
streak in the 78 years that labor figures have been reported. And
Americans quitting their jobs is rising. That`s generally seen as a sign
that workers are confident they can find a new, even better paying job
quickly.

HERERA: While the numbers look good, not every American is benefiting.
Job growth has been concentrated in some industries more than others, and
in some parts of the country more than others, in part because economies
naturally evolve, and also because the development of new technologies.
So, we decided to look at not just the quantity but the quality of those
newly created positions.

(BEGIN VIDEOTAPE)

HERERA: The nation`s employment picture has improved but measuring
improvement isn`t always easy.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Yes, our progress has been
uneven. And the good news is that today the economy is growing again,
wages, incomes, home values and retirement accounts are all rising again.

HERERA: The Department of Labor says we added more than 2 million jobs
last year. How good, though, are those new jobs?

The average national wage rose almost 3 percent last year, hitting $26 last
month. But many new hires aren`t making that much. When the economy is
performing reasonably well, Haver Analytics says most new hires, nearly 60
percent, are paid above average. You can see the dip there in 2010
followed by a recovery.

In 2014, only 40 percent of new hires topped the average wage. That number
bounced back in 2015. In 2016, though, the Department of Labor says hiring
in the best paying sectors, utilities and information was flat.

The next highest payer, the financial sector, added 159,000 jobs last year,
but that sector still counts 45,000 fewer employees than it did when it
peaked in 2006.

Professional and business services is the only high paying sector to add a
substantial number of jobs, more than half a million. Construction jobs
pay above average but added only 100,000 jobs. Mining and logging which
includes oil and natural gas was down in December and is still down, way
down off by 26 percent since September of 2014. And the manufacturing
sector lost workers for the year.

So, who he is getting hired?

The answer is, a good number of people making less than $26 an hour.
Health services and private education workers who make just under $26 and
hour added almost 600,000 employees, and leisure and hospitality workers
who make significantly less than $26 an hour count 295,000 new workers.
That`s almost 900,000 jobs paying less than the current average wage.

JANET YELLEN, FEDERAL RESERVE BOARD CHAIR: Challenges do remain. The
economy is growing more slowly than in past recoveries.

OBAMA: Too many of our families in inner cities and in rural counties have
been left behind.

HERERA: Critics worry about workforce participation near a four decade
low. Less than 63 percent due in part to huge numbers of baby boomers
retiring but also do in part to people opting not to look for work.
They`re doing so even as employers post record numbers of job openings and
complain about a lack of qualified workers.

(END VIDEOTAPE)

HERERA: So, the question is, can we close the skills gap in the talent
pool? And if we can, can we do it fast enough to keep up with the number
of jobs we`re losing to automation?

MATHISEN: So, while questions about the job market do remain, President-
elect Trump has made a big promise to boost hiring.

(BEGIN VIDEO CLIP)

DONALD TRUMP (R), PRESIDENT-ELECT: Over the next ten years, our economic
team estimates that under our plan, the economy will average 3.5 percent
growth and create a total of 25 million new jobs.

(END VIDEO CLIP)

HERERA: But is that even possible as workplaces do become more automated
and the very nature of work changes pretty dramatically?

Robert Salomon is the professor of management at New York University`s
Stern School of Business and he joins us now to talk about that.

Welcome back, Professor. Nice to of you here.

ROBERT SALOMON, NEW YORK UNIVERSITY`S STERN SCHOOL OF BUSINESS: Thanks for
having me.

HERERA: That is the question, can we create the jobs in those numbers
given the changing dynamic in the workplace right now?

SALOMON: I think it will be exceeding difficult to hit the 25 million jobs
number. If we look at the Clinton administration, under which the most
jobs under any president since FDR were created, under the Clinton
administration, 20 million or nearly 20 million jobs were created. In
order for Trump to create 25 million jobs, a lot will have to go absolutely
perfectly.

MATHISEN: So, what`s a reasonable number do you think in this mature
economy right now with unemployment at 4.7 percent for job growth going
forward?

SALOMON: That`s a good question. I think the main thing is to try to
encourage those people who have dropped out of the labor force to rejoin
the labor force and as the economy grows, that will continue to happen. I
think that some of the tax policies that the Trump administration is
looking to put through could also help growth increase, but I do not see a
huge productivity boom that would lead to any kind of gain like 25 million.

And one of the things that`s working against us is that over the next five
years, people of prime working age between 25 and 54 years old, that number
will actually go down. So, it will be very, very hard to hit a 25 million
number over the next four to eight years.

HERERA: What about the skill set of American workers in general? Are you
one who is as worried as others are that the rise of automation has really
changed the dynamic in the workforce and that those workers who have lost
their jobs are not trained for the new type of jobs that are being created?

SALOMON: I do. I do agree that there is something of a skills mismatch
between the jobs that are available right now in the economy in which we
live and the economy of tomorrow, which I refer to as something of a
digital age or a digital — digital economy versus the kinds of skills that
people have and are equipped for in the economy of yesterday which was an
industrial economy.

So, as we move from an industrial age into a digital age, we`re finding
that it`s very, very difficult to get people equipped for this new reality.

MATHISEN: Quick answer please to what I know is a hard question, what is
the single most constructive thing the incoming administration could do to
amp up job growth and get the economy growing at a higher plateau?

SALOMON: Well, I think that their aim will be to do it that through tax
reductions. That will be the main way to do it. I also think job
retraining for those folks who are equipped only for the industrial kind of
economy to retrain them for the skills that they`ll need to be employed in
the digital economy.

HERERA: You know, we have just about 30 seconds left, is there a risk that
the new administration has very ambitious goals and certainly a very
ambitious agenda, but the workforce that is out there that is hoping that
these new jobs will be created and then they are not or could not be
created?

SALOMON: Yes, I think that this administration looks at manufacturing as
the key to reemploying those people. Unfortunately, just because we retain
or keep or prevent manufacturing from leaving the United States, it does
not follow that manufacturing jobs will be created, because there is so
much more automation now.

HERERA: Right. Professor, always a pleasure to speak with you. Thank you
for joining us.

SALOMON: Thanks for having me.

HERERA: Professor Robert Salomon with New York University`s Stern School
of Business.

MATHISEN: And still ahead, one place where there are not enough workers is
on America`s farms and it is forcing some farmers to do what they`ve never
done before.

(MUSIC)

HERERA: As we`ve reported, U.S. businesses have added millions of jobs
since the Great Recession. In fact, there are more than five and a half
million job openings across the country, a near record level. But there`s
one industry that is experiencing a labor shortage and it is agriculture.
And now, some farmers are worried that Donald Trump`s immigration policies
could make that problem even worse.

Aditi Roy reports from Gilroy, California.

(BEGIN VIDEOTAPE)

PETE AIELLO, UESUGI FARMS CO-OWNER & GENERAL MANAGER: This here is 70
acres.

ADITI ROY, NIGHTLY BUSINESS REPORT CORRESPONDENT: Pete Aiello and his dad
have been farming for 40 years on their 5,000-acre operation based in
northern California. But, lately, they`ve had a growing problem.

AIELLO: We`re leaving some crops behind. We`re not able to keep up with
harvests.

ROY: The Aiellos don`t have enough workers to harvest crops. They`re not
alone. Across the country, farmers are facing a labor shortage that some
are calling a crisis.

AIELLO: Of course, it`s a financial burden. You have to make difficult
decisions sometimes as far as having two fields to harvest but only being
able to harvest one of them.

ROY: Partnership for a New American Economy, a bipartisan immigration
reform group, reports between 2002 and 2014, the number of full time
agricultural workers has dropped by 146,000 people, resulting in a loss of
about $3 billion in crop productions. And the American Farm Bureau
Federation has come out with videos showing farmers forced to destroy crops
or let them rot in the fields because they simply don`t have enough workers
to pick them.

UNIDENTIFIED MALE: Last year, I had to do something I had never done
before. Destroy ten acres of good squash.

ROY: And now, some farmers are worried the problem will get even worse if
Donald Trump makes good on his campaign promise to deport undocumented
workers.

DONALD TRUMP (R), PRESIDENT-ELECT: We are going to triple the number of
ICE deportation officers.

ROY: More than half of the country`s agricultural workers are
undocumented, according to the USDA. The American Farm Bureau estimates an
immigration policy that focuses solely on enforcement could cost the
country $60 billion in agricultural production.

KRISTI BOSWELL, AMERICAN FARM BUREAU: We are at the point that we are
importing our labor or importing our food. And farmers (INAUDIBLE) across
American want to provide these locally grown fruits and vegetables to our
consumers, but we have to have access to a legal and stable workforce to
get that done.

ROY: Pete Aiello calls the current immigration system broken. He says
he`s watching and waiting to see if Trump can fix it.

AIELLO: We need to come up with a system that works first and then secure
borders.

ROY: On the solutions side, the American Farm Bureau says the current
temporary guest worker program, the H2A visa program, is full of
bureaucratic challenges and delays. The group believes any effective
immigration policy needs to reform that system.

For NIGHTLY BUSINESS REPORT, I`m Aditi Roy, Gilroy, California.

(END VIDEOTAPE)

MATHISEN: Not only are farmers looking for workers, but so is the U.S.
Border Patrol.

Kate Rogers (NYSE:ROG) is in Artesia, New Mexico, to show you why the
agency is having a tough time finding recruits.

(BEGIN VIDEOTAPE)

KATE ROGERS, NIGHTLY BUSINESS REPORT CORRESPONDENT: If you are looking for
a challenging career and have a desire to serve and protect, look to the
nation`s borders. The U.S. Customs and Border Protection Agency is
actively recruiting.

MARK MORGAN, U.S. BORDER PATROL CHIEF: We are looking for men and women
that really have an innate set of core values, of honesty, of integrity, of
dedication, of respect.

ROGERS: The agency needs to bring on around 1,700 new border patrol agents
in the near future to help protect 6,000 miles of the country`s land border
and more than 300 points of entry. However, many job applicants don`t make
it through initial screening.

MORGAN: It`s hard to get in. We expect a lot of it. For every 175 that
apply, one border patrol agent gets hired.

ROGERS: Among other challenges in recruiting and retaining, the job is
dangerous and often requires agents to deal with harsh terrain and weather
conditions and relocate to remote areas.

MORGAN: Generally, we`re not in major metropolitan cities and that can be
a negative aspect for some folks, but I think that the mission that we have
outweighs that.

ROGERS: New agents like 23-year-old Jose Ramirez attend the training
academy in Artesia, New Mexico, for roughly four months. They`re recruited
in prior backgrounds and prior law enforcement experience isn`t necessary.

For Ramirez, it is a chance to serve the country and continue the legacy of
his older brother who died in the line of duty.

JOSE RAMIREZ, JR., U.S. BORDER PATROL ACADEMY TRAINEE: Being in the
academy is a challenge. But I know that every step and everywhere I am, I
know my brother`s foot steps were there. So, every time I come to a
struggle or anything, I think of him.

ROGERS: Trainees get full board and they`re paid at around $50,000 a year,
but the training process is rigorous. I spent the day at the Border Patrol
Academy to find out what it takes to prepare for the complexities of
becoming a border patrol agent.

New agents learn the law and how to process legal and undocumented border
crossers. they practice techniques and go through demanding fitness
training. They learn Spanish to be fluent by the time they graduate and
trains riding off-road to be ready for the southern border`s harsh terrain.

They also get combat training.

UNIDENTIFIED MALE: Extend the right hand to the neck. Yes, give it to
him. Give it to him. Harder, harder, harder. Now, throw him.

ROGERS: And have to be ready to fight in the dark.

UNIDENTIFIED MALE: Good, good, good. To go your right. Excellent.

ROGERS: Water safety is also a must, including climbing Jacob`s ladder.
Dangling 25 feet in the air and being ready to take plunge.

For NIGHTLY BUSINESS REPORT, I`m Kate Rogers (NYSE:ROG) in Artesia, New
Mexico.

(END VIDEOTAPE)

HERERA: Coming up small business owners drive job creation and there`s one
entrepreneur who`s helping his peers hire even more.

(MUSIC)

MATHISEN: Here is a look at what to watch this week. A lot of Dow
components report earnings. These are really critical numbers coming out,
including UnitedHealthcare, Goldman Sachs (NYSE:GS), IBM, American Express
(NYSE:EXPR) (NYSE:AXP) and GE. The Federal Reserve releases its aptly
titled Beige Book, an anecdotal but really interesting look at the economy
across the country.

And on Friday, Donald Trump will be sworn in as the 45th president of the
United States and that is what to watch this week.

HERERA: Small businesses are really the backbone of the economy and they
often drive job creation. All of their ventures start with a bright idea
and are often built around and entrepreneur`s own skill.

Take military vet Chris Nolte for instance. He came home from the Middle
East with a debilitating back injury. His desire, though, to get active
and get back in shape along with his multitasking and problem solving
skills helped him find electric bicycles, and now, as Bill Griffith tells
us, he`s staking a claim in this niche but fast growing market.

(BEGIN VIDEOTAPE)

BILL GRIFFETH, NIGHTLY BUSINESS REPORT CORRESPONDENT: Before he found
electric bikes, back pain limited Chris Nolte`s ability to exercise, to
work. Indeed, to live life. He hurt his back while serving in the
military.

CHRIS NOLTE, PROPEL ELECTRIC BIKES FOUNDER: I grew up very quickly in the
military. You know, I went in at 19 years old. I was overseas at 20, 21.

GRIFFETH: In 2000, Nolte joined the Army Reserve. He operated fuel supply
trucks, a truck landed in a ditch in Kuwait, only days before the start of
the Iraq War in 2003. And despite hurting his back, Nolte stayed on four
months before coming home to Long Island.

NOLTE: I was very concerned when I returned about what my future is going
to look like.

GRIFFETH: Physical labor business not an option. By 2006, he was helping
a family friend put his luggage sales business online. He was immersed in
e-commerce when in 2011, he discovered electric bikes — online, of course.

Nolte converted his own bike and got the push he needed to get back on the
road.

NOLTE: I didn`t need to focus on where I was limited with my physical
abilities and I just kept on learning.

GRIFFETH: He learned that 180 million electric-powered bikes are on the
roads in China. Many use motorcycle-like throttles but now pedal-assist
bikes are becoming more popular. The motor is engaged only when the rider
pedals. Bosch eBikes Systems makes drive mechanisms of many popular bike
brands.

The CEO recently said 1 out of every 3 bikes sold in the Netherlands is
electric. In Germany, more than 1 in 5 new sales are e-bikes but in the
U.S. it`s barely more than 1 out of 100.

Sensing an opening, Chris Nolte began selling e-bikes online in 2011.

NOLTE: Our first year, we did about $50,000 in business. And then we were
pretty much tripling for every year after that in size. Up until 2014, we
hit $1 million in sales.

GRIFFETH: Nolte says 2016 will be his third year in a row with sales of at
least $1 million. Last year, he opened a retail shop in Brooklyn, New
York. Most of his bikes sell in the $2,500 to $4,000 range. Baby boomers
looking for help exercising or just getting around are natural customers
but Nolte says millennials are buying in, too.

TYLER GLASS, E-BIKE CUSTOMER: I don`t have to deal with parking. I just
pull it into the living room at night.

GRIFFETH: Tyler Glass paid about $3,500 for an e-bike to travel 10 to 20
miles in New York City pretty much every day.

GLASS: I fell in love the second I rode one.

GRIFFETH: For the business to thrive, Nolte knows the American mindset
will have to embrace the idea of using bikes for transportation, not just
for recreation and exercise.

NOLTE: We`re kind of building something for the future as biking
infrastructure improves.

GRIFFETH: New York City, which has become more bike friendly, is only city
in New York state where pedal-assisted bikes are street legal. Across the
country, regulations are murky, but Nolte, ever the transportation
specialist, is confident that that will change.

NOLTE: I don`t see it as just a small percentage of the bike market
overall. I see a percentage of just people that need to move. And,
really, that`s kind of what our tag line is. Changing the way we move.

GRIFFETH: For NIGHTLY BUSINESS REPORT, I`m Bill Griffeth.

(END VIDEOTAPE)

HERERA: Bike sales in Europe have been flat for more than a decade except
when it comes to electric bikes. Chris Nolte believes there will be a of
opportunity to scale up if laws pertaining to electric bikes become more
uniform across this country.

MATHISEN: Entrepreneurs can come from anywhere and do basically anything.
But you might wonder what an electrician knows about running a company.
Some know quite a bit, others not so much. That`s why a New Jersey
electrician who once said there`s got to be a better way and then figured
it out got the bright idea to share his knowledge, for a price of course.
The way he sees it he`s helping others create more jobs than he could ever
create on his own.

(BEGIN VIDEOTAPE)

UNIDENTIFIED MALE: That`s a big deal.

MATHISEN: Mike Agugliaro can get a charge out of people. And no wonder,
at age 19, he became a full time electrician. Three years later, he and a
partner started gold medal electric contracting in central New Jersey.

They worked long hours. Did everything themselves. But like so many small
business owners, they did little else.

MIKE AGUGLIARO, CEO WARRIOR CO-FOUNDER: We got so burned out that my
partner came to me one morning and he said, Mike, I`m done.

MATHISEN: In 2004, after 11 years, it was either unplug the business or
find a better way. So, they invested heavily to learn how to actually run
a serious business.

AGUGLIARO: We spent over $800,000 on training the very best we could find.

MATHISEN: They started reading. They went to Disney (NYSE:DIS) to learn
about culture. Zappos to become more efficient.

But one thing stuck out —

AGUGLIARO: Everything is marketing and marketing is everything.

MATHISEN: The simplest tweets helped turn their business and their lives
around.

AGUGLIARO: I did some study, and I found out, well, yellow is the first
color the eye sees. So, it`s like, let`s have yellow trucks. Nobody had
yellow trucks out there. And people were telling us, I see you everywhere.
I was like, everywhere? We have three trucks.

I was like, OK, we`re on thumbs and big right now.

MATHISEN: Very big, in a few years, gold medal added plumbing, heating and
cooling services. Now with 145 trucks and 190 employees, gold medal is on
track to hit $32 million in sales this year. He`s only in the office about
two or three times a week now, but he`s still busy because other service
company owners started asking how he did it.

That`s when he realized his knowledge, his experience, might be more
valuable to him even than it is to him.

AGUGLIARO: Nobody`s really stepping in and serving these people, so I said
why don`t we go out there and just change lives for anybody and any type of
service business.

MATHISEN: It was the germ of what would become a multimillion dollar idea.
Phone calls and Facebook (NASDAQ:FB) posts grew into a full blown
consulting business in 2013. One year in, another marketing change, a new
name for the consultancy, CEO Warrior. Annual sales, more than $3 million.

Eric Corbett became a warrior three years ago. He was about to buy his
brother out and take over the Maryland plumbing business their father
started in 1960. He signed up for a four-day Warrior event.

ERIC CORBETT, LARRY & SONS OWNER AND PRES.: We were pretty average at that
point. And we said, you know what, we don`t want to be average.

MATHISEN: Five times a year, Agugliaro hosts these events drawing a
hundred or so service oriented companies that pay about $7,500 each.

Corbett later upgraded to the Warrior fast track. That stepped up tier
costs $36,000, but gets you full time access to Agugliaro`s business
improvement. First hand looks inside gold medal, even a taste of martial
arts, a long time Agugliaro passion.

There are about 95 fast trackers like Corbett. In three years, his
business has grown from 22 employees to 30. Revenues up from less than 4
million a year to more than 4.5 million.

CORBETT: We`re really healthy as a company and positioned to have some
great growth here moving forward.

MATHISEN: That`s the kind of rewiring Mike Agugliaro likes.

AGUGLIARO: Why do I exist on this planet and it`s not to be an
electrician. It was never to do that. I knew there was a bigger part in
it and this is why for me — change lives.

(END VIDEOTAPE)

MATHISEN: Agugliaro has also written four books and he`s beginning to
invest in commercial real estate, following the advice he found himself
giving to other CEOs to manage and protect their wealth by diversifying
their business interests.

HERERA: Good for him.

MATHISEN: Cool start.

HERERA: It is.

Thank you so much for watching this edition of NIGHTLY BUSINESS REPORT.
I`m Sue Herera.

MATHISEN: And I`m Tyler Mathisen. Have a great evening everybody. We`ll
see you back here tomorrow.

END

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